ATLANTA (AP) — A proposal to trim a Georgia utility's profits should it go over-budget in constructing a nuclear power plant faces an uphill climb in the state Legislature.
Rep. Jeff Chapman, R-Brunswick, asked a House subcommittee Tuesday to support his proposal to cut into the profits of Georgia Power if the company's cost of building Plant Vogtle (VOH'-gohl) near Augusta exceeds a state-approved budget of roughly $6.1 billion. Georgia Power is a subsidiary of the Atlanta-based Southern Co.
As a regulated monopoly, the utility earns a profit of roughly 11 percent on every dollar it invests in the capital project. Chapman's plan would force the utility to earn a much lower profit on any spending in excess of its budget.
"The way it's set up today, it actually incentivizes cost overruns," Chapman said. "Now I don't believe Georgia Power would intend to do that. But they can legally now charge and profit from cost overruns."
Georgia Power officials say the project is already monitored by the state's Public Service Commission, which can prevent the utility from passing along costs to customers if it decides any project spending is egregious.
"This provides a very real incentive to make sure we're managing costs effectively," John D'Andrea, the utility's legislative affairs manager, told lawmakers.
Last year, federal regulators gave Southern Co. permission to build two Westinghouse Electric Co. AP1000 reactors at the site of an existing power plant in eastern Georgia. It was the first time since 1978 that a utility won permission to break ground on a nuclear plant.
State regulators have authorized Georgia Power to spend about $6.1 billion as its share of the estimated $14 billion project cost. The other owners include Oglethorpe Power Corp., the Municipal Electric Authority of Georgia and the city of Dalton.